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Nigeria's eNaira Attracting Global Attention, Says IMF

The International Monetary Fund (IMF) has revealed that Nigeria's digital currency, the eNaira has been "drawing substantial interest from the outside world," since it was unveiled on October 25, 2021.

In its 'Country Focus' article on Nigeria authored by Jack Ree of the African Department and published in its website, the IMF noted that like digital currencies elsewhere, the eNaira carries risks for monetary policy implementation, cyber security, operational resilience, and financial integrity and stability.

The fund noted that although the digital currency was expected to increase financial inclusion and facilitate remittances, the CBN should be prepared to manage the potential risk associated with managing a digital currency.

Noting that Nigeria's eNaira was the second central bank-backed digital currency (CBDC) fully open to the public after the Bahamas, the IMF stated that countries and regions, such as China and the Eastern Caribbean Currency Union had been conducting CBDC pilots with a subset of their citizens.

It stated: "For example, eNaira wallets may be perceived, or even effectively function, as a deposit at the central bank, which may reduce demand for deposits in commercial banks. Relying as it does on digital technology, there is a need to manage cybersecurity and operational risks associated with the eNaira."

The multilateral institution stated that in introducing the eNaira, the CBN envisaged that it would bring multiple benefits, which were expected to materialise gradually as it becomes more widespread and is supported by a robust regulatory system.

It listed some of the key benefits to include increase in financial inclusion; facilitation of remittances; exchange rate reforms, including a unified market-clearing rate that reduces the gap between official and parallel market exchange rates, and greater transparency to informal payments, among others.

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